Reducing asymmetric information in insurance markets: cars with black boxes
- We examine the effects of ex post revelation of information about the risk type or the risk-reducing behavior of insureds in automobile insurance markets both for perfect competition and for monopoly. Specifically, we assume that insurers can offer a contract with information revelation ex post, i.e., after an accident has occurred, in addition to the usual second-best contracts. Under moral hazard this always leads to a Pareto-improvement of social welfare. For adverse selection we find that this is also true except when bad risks under self-selecting contracts received an information rent, i.e., under monopoly or under competition with cross-subsidization from low to high risks. Regulation can be used to establish Pareto-improvement also in these cases. Privacy concerns do not alter our positive welfare results.
| Author: | Lilia Filipova, Peter WelzelGND |
|---|---|
| URN: | urn:nbn:de:bvb:384-opus4-711840 |
| Frontdoor URL | https://opus.bibliothek.uni-augsburg.de/opus4/71184 |
| Series (Serial Number): | Volkswirtschaftliche Diskussionsreihe (270) |
| Publisher: | Volkswirtschaftliches Institut, Universität Augsburg |
| Place of publication: | Augsburg |
| Type: | Working Paper |
| Language: | English |
| Date of Publication (online): | 2020/02/20 |
| Year of first Publication: | 2005 |
| Publishing Institution: | Universität Augsburg |
| Release Date: | 2020/02/21 |
| Tag: | JEL: D82, G22 |
| Page Number: | 31 |
| Note: | Also published in: Telematics and Informatics, Volume 27, Issue 4, November 2010, Pages 394-403 ; https://doi.org/10.1016/j.tele.2010.03.003 |
| Institutes: | Wirtschaftswissenschaftliche Fakultät |
| Wirtschaftswissenschaftliche Fakultät / Institut für Volkswirtschaftslehre | |
| Wirtschaftswissenschaftliche Fakultät / Institut für Volkswirtschaftslehre / Lehrstuhl für Ökonomie der Informationsgesellschaft | |
| Schriftenreihen / Volkswirtschaftliche Diskussionsreihe | |
| Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Journals: | Volkswirtschaftliche Diskussionsreihe |
| Licence (German): |  Deutsches Urheberrecht |
